What to present an investor when bringing a deal
Investor · Chicago, IL · Member since 2016 · 81 posts · 81 votes
Good Morning BP,
I am planning on writing an LOI for a property in the next week. The deal will be either a 4, 6, or 10 unit property(depends on who accepts my offer). These are all LTR that require some work but the extent of the work isn't too drastic, mostly cosmetic. My goal is to get the investor to partner with me and they will bring the reserves, deposit, down payment, closing costs, and rehab funds to the table and I will get the rest from a lender. When I present my offer, what are the big ticket items I should be presenting to the investor? Myself and a couple buddies will be managing the property and all the work that needs to be done so it will be very hands off for the investor if they so choose. I have a pretty good idea of what to present the investor but since this is my first time doing a real estate deal in this fashion, I wanted to get some advice from the BP community before I execute.
Thank you in advance for the help!
Very Respectfully,
Lucien
Some things to bring to the table:
1. Current rents and current cash flow details
2. Pro-forma rents and pro-forma cash flow details (with comps to support)
3. Proposed renovation plan and justification for the renovations
4. Proposed renovation budget (with all items outlined i.e. flooring, paint, countertops, baseboard, plumbing fixtures, landscaping, etc)
5. Schedule of key dates (earnest money due, closing date, draw dates, stabilization target, etc)
6. Due diligence docs (package of all seller docs including leases, recent improvements, rent deposits, tax bill, etc)
7. ROI proposal (what return will this investor receive on their money now and in the pro-forma scenario?)
8. Loan details (are you going to take out an interest only loan or a fully amortized loan from the investor? how long will the term be? etc.)
9. Exit strategy (when will this investor see their principal back?)
Some things to bring to the table:
1. Current rents and current cash flow details
2. Pro-forma rents and pro-forma cash flow details (with comps to support)
3. Proposed renovation plan and justification for the renovations
4. Proposed renovation budget (with all items outlined i.e. flooring, paint, countertops, baseboard, plumbing fixtures, landscaping, etc)
5. Schedule of key dates (earnest money due, closing date, draw dates, stabilization target, etc)
6. Due diligence docs (package of all seller docs including leases, recent improvements, rent deposits, tax bill, etc)
7. ROI proposal (what return will this investor receive on their money now and in the pro-forma scenario?)
8. Loan details (are you going to take out an interest only loan or a fully amortized loan from the investor? how long will the term be? etc.)
9. Exit strategy (when will this investor see their principal back?)
I agree with Scott
Your deal is not so small that time expended putting that kind of information together nicely would cut into returns (I prepare information and pitches on an anticipated as-needed basis)
Some things to bring to the table:
1. Current rents and current cash flow details
2. Pro-forma rents and pro-forma cash flow details (with comps to support)
3. Proposed renovation plan and justification for the renovations
4. Proposed renovation budget (with all items outlined i.e. flooring, paint, countertops, baseboard, plumbing fixtures, landscaping, etc)
5. Schedule of key dates (earnest money due, closing date, draw dates, stabilization target, etc)
6. Due diligence docs (package of all seller docs including leases, recent improvements, rent deposits, tax bill, etc)
7. ROI proposal (what return will this investor receive on their money now and in the pro-forma scenario?)
8. Loan details (are you going to take out an interest only loan or a fully amortized loan from the investor? how long will the term be? etc.)
9. Exit strategy (when will this investor see their principal back?)
@Scott E. laid it out really nicely. I would add your background and partners backgrounds and why you are fit to take on a project like this. I would recommend you talk with investors first and make sure that these properties fit in their investment criteria. From this post it sounds as if investors are not lined up already and I would caution you to put in a LOI if you don't have them on board and lined up. You will spend more time than you would think finding investors/lining them up and then scrambling at the end of your due diligence period to make it across the finish line (I know from first-hand experience). If you have investors already lined up that is great but then just ask them what they would like to see in order to make a decision.
Some things to bring to the table:
1. Current rents and current cash flow details
2. Pro-forma rents and pro-forma cash flow details (with comps to support)
3. Proposed renovation plan and justification for the renovations
4. Proposed renovation budget (with all items outlined i.e. flooring, paint, countertops, baseboard, plumbing fixtures, landscaping, etc)
5. Schedule of key dates (earnest money due, closing date, draw dates, stabilization target, etc)
6. Due diligence docs (package of all seller docs including leases, recent improvements, rent deposits, tax bill, etc)
7. ROI proposal (what return will this investor receive on their money now and in the pro-forma scenario?)
8. Loan details (are you going to take out an interest only loan or a fully amortized loan from the investor? how long will the term be? etc.)
9. Exit strategy (when will this investor see their principal back?)
Thank you very much for this detailed list. I have all except number 5 and now I'll need to figure out how to put that all together.